FIAs Have Second-Best 2Q In History

Annuity carriers sold nearly $12.3 billion in fixed index annuities (FIAs) in the second quarter of this year, according to a new report from Wink Inc.

Although down 2.5 percent from last year’s record-breaking second quarter, the sales outpaced the previous quarter by nearly 8 percent, the researcher said.

With the exception of second quarter 2014, FIA sales were “greater this quarter than in any other second quarter in the history of the product line,” Sheryl J. Moore, president and CEO of both Wink and Moore Market Intelligence, said in releasing the results.

The figures are part of a package of data from Wink that also includes sales figures on traditional fixed annuities (FAs) and multi-year guaranteed annuities (MYGAs). The FA sales totaled more than $3.7 billion, and MYGA sales more than $4.2 billion. The new material provides a deeper look at overall fixed annuity business trends.

FIA sales

On a first-half basis, FIA sales rose slightly, to $23.6 billion, for a gain of nearly 1 percent over first-half last year, according to the Wink figures. But last year’s top five carriers are still in the top five, although with some shifts in ranking.

Allianz Life still holds its long-standing position of first place, although its reported sales were off by nearly 33 percent from first half last year. Allianz’s first-half sales totaled $4.4 billion, as compared with $6.6 billion in the same period last year.

As for second-quarter results, Allianz was not only the quarter’s top selling FIA carrier. The insurer also had the top-selling FIA overall — the Allianz 222 Annuity. In addition, Allianz had two other FIAs that placed in Wink’s overall top 10 list for the quarter — the Allianz 360 Annuity and the Allianz Core Income 7 Annuity.

Independent agents continued their dominance as the leading distribution channel for FIAs, taking 70 percent of market share in the second quarter.

Meanwhile, the broker/dealer (BD) channel, a virtual non-player in the not-too-distant past, made a decent showing. It won a 12 percent share of market among independent BDs and another 2 percent share among full-service national BDs. Banks came in third place among FIA distributors with a 10 percent market share in second quarter.

The average FIA commission to the agent was about the same as last quarter, at a hair above 5.8 percent. This is well below the 10-year high of 8.4 percent in third quarter 2005.

The average FIA premium was $89,225, up by more than 8 percent compared to first quarter and a record high over the last 10 years, based on the Wink figures. But given that total FIA policy count for second quarter was down by more than 19 percent, to 128,673, compared to first quarter, the industry appears to have sold fewer but larger FIAs in second quarter.

The new FA and MYGA data

Wink’s new FA and MYGA reports provide some interesting points of comparison in the overall fixed product universe.

For example, even though American General was the No. 1 leader in traditional FA sales, bringing in more than $540 million in the second quarter FA sales, the overall top-selling FA was MAX One XL. That’s a policy from Jackson National. In fact, six Jackson FAs made it into Wink’s list of top-selling FAs overall.

So what is to explain American General’s top sales ranking? A lot of it has to do with its distribution channel. It was the top seller in the bank channel which, at a 45 percent share, outsold all other FA distribution channels for the quarter.

Over on the MYGA side, the overall sales leader was Forethought Life, whose second quarter sales approached, but did not quite reach, $1 billion. It reported a MYGA sales total of $956 million for the quarter, according to Wink. This was far greater than the totals for all other MYGA carriers, including second place Delaware life, which came in at $248+ million.

Forethought’s MYGA sales were so strong in the quarter that three of its MYGAs placed in Wink’s top 10 list of MYGA products overall.

Three of the Forethought products also placed in the top 10 list of MYGAs sold in banks, and three placed in the top 10 list of MYGAs sold in full-service national BDs. In addition, two Forethought MYGAs appeared on the top 10 list of MYGAs sold in the independent BD channel.

Also, when MYGA sales were ranked by distribution channel, Forethought ranked first place among both banks and full-service BDs.

In the MYGA market, then, Forethought all but stole the show in second quarter.

Another noteworthy item in the FA and MYGA data has to do with channel leadership. In brief, the BDs are making themselves visible in these markets. They don’t make the seas part but they do have a presence. Consider:

FIAs: In the FIA market, the leading distribution channel continues to be independent agents (70 percent), as noted earlier. But FIA distribution among BDs came in second, at 14 percent if combining the market share of independent BDs (12 percent) with that of full-service national BDs (2 percent). Banks came in third at 10 percent.

FAs: Banks were the top distributor (45 percent share) in the FA marketplace, followed by independent agents (33 percent). But, contrary to industry buzz that BDs mostly avoid FAs, the report shows that BDs also did sell FAs. Specifically, the independent BDs took a 9 percent share of the FA market in second quarter, and even the full-service national BDs kicked in with a share flirting above 3 percent, making for 12 percent combined.

MYGAs: Banks led in MYGA market share with a clear majority (62 percent). Independent agents came in second at 16 percent. But then, in third place, were none other than the BDs, with 11 percent combined (independent BDs at 7 percent, and full-service national BDs at 5 percent).

As for commissions, Wink reports that the average FA commission to the agent was 3 percent of premium in second quarter, and the average MYGA commission was 2 percent. That’s one-half or more of the average commission paid for FIAs (5.8 percent).

The new data

This is the first time that Wink has published sales results for FAs and MYGAs, so the firm does not yet show comparisons with previous quarters.

Also, some results are estimated, the researcher points out, and the results do not cover the entire market. For instance, the FA figures represent 71 percent of active FA carriers totaling 39 percent of production, the new report said. And the MYGA figures represent 68 percent of active MYGA carriers totaling 46 percent of production. By comparison, the report on quarterly FIA sales covers more than 94 percent of active FIA companies, representing an estimated 99.8 percent of total FIA production, Wink said.

InsuranceNewsNet Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at [email protected].